Subscribers of utilities are typically billed monthly for usage during the preceding month. Subscribers are sent, via regular mail, a written billing statement, which itemizes the services being provided and associated costs. Specifically, billing statements for telephone services indicate the type of standard services being rendered, special features subscribed to, toll usage during the month, as well as state and federal taxes, maintenance fees and applicable access and line charges. In addition, the billing statement informs the subscriber of the deadline for payment to avoid service charges and to assure uninterrupted service.
Upon reviewing the charges and verifying that billing is correct, subscribers typically write a check for the billed amount and return the check along with an appropriate page of the billing statement to the telephone service provider via regular mail. Rarely do billing questions arise which would necessitate that the subscriber make personal contact with the telephone business office. Some subscribers, particularly those who make payment on or about the payment deadline, must visit the billing office to ensure payment credit by the payment deadline.
The cost to the subscriber who remits payment via check through the regular mail is twenty-nine to about fifty-nine cents (twenty-nine cents for standard postage and up to about thirty cents for the blank check and per item bank charges). For near-deadline remitters, the cost to make payment will include travel expenses to the business office, any time lost from work, and the hassle of long lines at business offices that may result around billing deadlines. The administrative cost to the telephone company in facilitating these methods of bill payment can be measured in terms of the personnel hired to physically open payment envelopes and manually enter subscriber's payment into the billing equipment and extra personnel needed to assist the volume of subscribers who make payment in person at the last minute.
The administrative costs to banking institutions of subscribers paying by check can be measured in terms of the cost of depositing and clearing checks. Banking institutions also incur the cost of microfilming and returning cancelled checks to subscribers. Some of these bank costs may be recovered by charging a per item deposit fee to the utility company, increasing its costs.
To obviate the expense and hassle of paying bills via check and regular mail, various establishments offer the option to subscribers of having their bill automatically paid via automatic funds transfer. This bill payment option has proven quite sensible and useful for paying bills that are for the same monthly amount (such as car notes, insurance premiums, mortgages, etc.); however, for bills that vary based upon customer usage or from period to period, this option is undesirable because the subscriber is not aware of the billing amount prior to automatic payment. More importantly, the subscriber has no opportunity to review and approve the charges prior to payment being made. Another drawback is that conventional electronic bill payment options are somewhat restrictive in that subscribers have no flexibility to pay the bill on a date other than that pre-specified at the time that automatic funds transfer is established.
Other establishments have developed bill paying schemes which require the subscriber to subscribe to a special communications or home banking network and/or purchase special hardware in order to pay bills electronically. Excel home banking system, a product of Hanover Trust, Prodigy consumer service, which is jointly owned by IBM and Sears, and CheckFree, a PC based bill paying service of CheckFree Corporation, to name a few, offer bill paying schemes via a specialized network service. In addition, these schemes may require the subscriber to purchase a computer (terminal or PC), to purchase special software, and to be a proficient computer user. Other consumer electronic bill payment alternatives, which employs special hardware, include: a Home Transaction System by U.S. Order, which uses a ScanFone; Online Banker service by Online Resources and Communications Corp. which uses a Screen Phone; CitiOne Bill Payment Services by CitiBank which uses an enhanced telephone; Bill and Pay System offered by Minitel, a subsidiary of France Telecom, which requires a Minitel unit or a PC; and TV Answer Communications network service which uses a TV answer home unit. These pre-requisites to many electronic bill payment alternatives, such as access to specialized networks, special hardware and software, and special computer skills, discourage subscribers from changing from their conventional bill payment methods of writing checks.
Furthermore, many of these proposed bill payment systems are driven by customer interaction with extensive and complicated menus, which are perceived by many subscribers to be too complex and cumbersome for practical use. Conventional systems also require the subscriber to input highly sensitive and personal information (such as bank account numbers) in order to effect bill payment. Subscribers are particularly apprehensive to disclose such sensitive information since subscribers generally perceive most bill payment systems to be insecure and vulnerable to improprieties. Subscribers' perceptions, in many cases, are justified given the susceptibility of the communications link between a subscriber's telephone and the payment system to eavesdropping and tapping and the vulnerability of computer systems to hackers. As a result, subscribers are hesitant and reluctant to transact bill payments using these electronic systems.